Australian Dollar Extends Drop As Victoria Lockdown Continues

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The Australian dollar continued to be lower against its major counterparts in the European session on Wednesday, after the state of Victoria extended its lockdown by another week to contain the spread of coronavirus infections.

Victoria’s Covid-19 infections rose by 6, to a total of 60 cases, on Wednesday.

In a press conference, acting Premier James Merlino said that people will be required to stay at home except for essential work. Salons and retail shops will be permitted to re-open and religious ceremonies were allowed by social distancing rules.

The news of lockdown offset the impact of upbeat GDP data for the first quarter.

Data from the Australian Bureau of Statistics showed that Australia’s gross domestic product climbed a seasonally adjusted 1.8 percent on quarter in the first three months of 2021.

That beat expectations for an increase of 1.5 percent following the 3.1 percent spike in the previous three months.

On a yearly basis, GDP was up 1.1 percent – again beating forecasts for an increase of 0.6 percent following the 1.1 percent contraction in the three months prior.

The aussie pulled back to 0.7715 against the greenback and 84.76 against the yen, off its early 1-week high of 0.7773 and a 3-week high of 85.20, respectively. The aussie is seen locating support around 0.75 against the greenback and 82.00 against the yen.

Retreating from its prior 5-day high of 1.5727 against the euro and a 6-day high of 0.9373 against the loonie, the aussie slipped to 1.5800 and 0.9316, respectively. The next possible support for the aussie is seen around 1.61 against the euro and 0.90 against the loonie.

In contrast, the aussie firmed to a 1-week high of 1.0707 against the kiwi, compared to yesterday’s close of 1.0674. If the aussie rises further, it may locate resistance around the 1.09 level.

Data from Statistics New Zealand showed that New Zealand terms of trade rose 0.1 percent on quarter in the first three months of 2021.

That beat expectations for a decline of 0.1 percent following the 1.3 percent increase in the previous three months.

Looking ahead, Canada building permits for April and Fed Beige book report are set for release in the New York session.

The material has been provided by InstaForex Company – www.instaforex.com

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